Experts predict oversubscription to Mwalimu Bank shares

Mwalimu Commercial Bank (MCB) initial public offer is expected to be oversubscribed by a great per centage banked on a solid capital foundation.

The bank has at hand 17bn/- and want to raise another 8.0bn/- to have a total of 25bn/- as starting capital. Bank of Tanzania capital threshold is 15bn/-.

The Core Securities Chief Executive Officer, Mr George Fumbuka, said the IPO is expected to be oversubscribed as shares left for the public to buy are for 8.0bn/- only which might not be sufficient.

“If the big buyers, pension funds, throw their weights on this, the amount is little… then we have teachers who their union has given them an offer of 100 shares each. Little is remaining,” Mr Fumbuka said.

The Tanzania Teachers’ Union announced that it will spend 11bn/- for buying its active members shares at the ongoing IPO. The 100 shares cost 50,000/-.

TTU has over 200,000 active members. “These shares cannot be sold by the teachers in the DSE until after one-year,” according to guidelines outlined in the prospectus of the bank. He said in case of oversubscription, MCB has green shoe option — to take excess shares of up to 10bn/-.

“If there is still oversubscription after applying the green shoe option, the shares on offer will be allotted to applicants pro rata,” Mr Fumbuka said.

The MCB share are allowed to be sold in other East African countries freely as long as this is permitted by regulatory authorities in those countries —Kenya, Uganda, Rwanda and Burundi.

The bank structure after the IPO will be TTU 16 per cent, Teachers’ Development Company Limited (TDCL) 4.0 per cent and public 80 per cent.

The dividend policy of MCB is to pay not less than 50 per cent of its profit available for distribution after making due reserves as directed by BoT.

The IPO of the bank ends in the first week of next month and the listing on the bourse’s alternative market is scheduled for June.

The bank is expected to open door to the public in the last quarter of this year. TTU president, Gratian Mukoba, said MCB becomes the fourth workers’ bank globally after America, Japan and Israel.